Setting executive pay is a huge responsibility and no one knows this better than a remuneration committee (Remco).  We often get asked to help companies benchmarking their pay, and get called into discussions about what the new rates should be.  So here are our tips on what Remco should be thinking about:

What information do we need to support our decision?

We recommend that you at least think about the following:

• benchmarking data to show
• where the current salaries (and other benefits) sit compared to your competitors
• what trends are occurring in your sector/generally
• where the risks lie (organisational and individual)
• performance information - both company and individuals - are they achieving what they are mean to?
• long term objectives - what are the long terms goals, are they progressing?
• internal relativities - what internal comparisons could be made and how will they be impacted by your decisions?

Does the salary demonstrate value for money?
Can you justify the rate of pay you are proposing in terms of what the organisation gets in return?  This means that you need to be satisfied that you are setting salaries that align to the value your exec team is delivering into the business.  It's not just about effort, it's also about results.

Is it in the best interest of the organisation?

This is crucial because this is one time when no matter what type of organisation you are, you really do have to be balancing what is right for the company and it's purpose with fiscal responsibility. 

Is your decision making process based on evidence?

Ensure you have gathered enough information in the pay review process to help you make an informed decision.  A robust process should guide decisions, considering the jobholder's role, responsibilities and market benchmarks.

Is your process transparent and justifiable?

Transparency really matters.  Make sure that your process is well-documented and your approach is clear and your decisions are proportionate. 

We really believe it's all about having a good rationale for your decisions and these tips will help you ensure you come to the right conclusions for your business.